What are Certificates of Deposit?

Certificates of deposit (CDs) require that money be kept in the account for a specific period of time to receive a specified return. CDs often require a larger initial investment than a savings account but yield a higher return. The longer the deposit length, the higher the interest rate will generally be because savers are keeping their money on deposit for a longer period of time. CDs are insured by the FDIC for up to $250,000, just like a passbook …

How is the interest rate on EE U.S. savings bonds determined?

Effective May 1, 2005, the interest rate on new Series EE bonds is fixed for the life of the bond. Existing Series EE bonds purchased before May 1, 2005, were not affected and continue to earn interest based on 90% of the average market yield of five-year Treasury securities.

Series EE bonds have used this variable interest rate method of crediting interest since 1982. Interest rates on previously issued U.S. savings bonds will continue to change every six months on …

What are investment assets?

Investment assets are tangible or intangible items obtained for producing additional income or held for speculation in anticipation of a future increase in value. Examples of investment assets include mutual funds, stocks, bonds, real estate, and retirement savings accounts such as 401(k)s and IRAs.

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A Comparison of Mutual Funds and Exchange Traded Funds (ETFs): Twelve Factors to Consider

Prepared by Dr. Jason L. Johnson, Associate Professor, Extension Economist, Registered Investment Advisor Texas A&M University and Texas AgriLife Extension.

Since the early 1990s, investors have had a choice between traditional mutual funds and a more recent counterpart labeled exchange traded funds (ETFs). Mutual fund assets continue to dominate the financial market with over $12.3 trillion invested. Between 2002 and the end of 2007, assets in ETFs increased almost 500% to more than $608 billion. On the surface, these two …

Saving for Children’s College Education

Yilmazer, T. (2008). Saving for children’s college education: an empirical analysis of the trade-off between the quality and quantity of children. Journal of Family and Economic Issues, 29(2), 307-324.

Brief Description: This paper examines the effect of children’s college expenses on household savings. Using the actual amount of parents’ financial support, the model estimates the expected expenditures on children’s college education and investigates the effect of expected expenditures on parents’ savings. The results show that households save in advance …

Fact Sheet Explains Options for Saving for College

The fact sheet lists information on personal investment accounts; traditional Individual Retirement Accounts; Roth IRAs; 401(K) and 403(B) retirement plans; custodial accounts, such as a Uniform Gift to Minors; Coverdell Education Savings Accounts; 529 plans; and U.S. Savings Bonds.

Released March 26, 2009

COLUMBUS, Ohio — Parents who are trying to save for their children’s education but aren’t sure where to start may find guidance in a four-page fact sheet, “College Savings Options,” from Ohio State University Extension.

The fact …

Investing Action Steps

The steps below suggest important actions for you to take to establish a solid foundation for future investing activity. Once completed, you will be ready to begin developing a personal investment plan.

Check each action step as it is completed.

  • Review your current financial holdings and determine if they are in saving or investment vehicles.
  • Determine the rate of return for your current financial holdings.
  • Establish short-, intermediate-, and long-term financial goals for you and your family. Estimate the length

How Time Affects The Value Of Money

Investor A invests $2,000 a year for 10 years, beginning at age 25. Investor B waits 10 years, then invests $2,000 a year for 31 years. Compare the total contributions and the total value at retirement of the two investments. This example assumes a 9 percent fixed rate of return, compounded monthly. All interest is left in the account to allow interest to be earned on interest.

Age Years Investor A Investor B
Contributions Year End Value Contributions Year End

The Time-Value of Money

Here is how time can work for you:

  1. The longer you invest, the more money you will accumulate.
  2. The more money you invest, the more it will accumulate because of the magic of compound interest.

Compounding works like this . . .

The interest earned on your investments is reinvested or left on deposit. At the next calculation, interest is earned on the original principal plus the reinvested interest. Earning interest on accumulated interest over time generates more and more …

Your Investment Goals

Your Investment Goals

Goals are specific things (e.g., buy a car, put a new roof on the house) that people want to do with their money. As people move through various life stages, their needs and financial goals change. Your selection of investments should relate closely to your financial goals. Each goal will define the amount and liquidity of the money needed as well as the number of years available for the investment to grow.…